Missing Links: Is Retargeting as Effective as It Seems?

On the face of it, retargeting is a powerful and effective marketing tactic that is often associated with high click-through and conversion rates. Almost two-thirds (64%) of European marketers planned to increase retargeting budgets at the start of this year.

Success is a matter of perception however, and the perceived effectiveness of retargeting may simply be a product of the way it is measured. As a lower-funnel tactic, retargeted ads are likely to be the final touchpoint a consumer interacts with prior to conversion.

Therefore, if marketers are using a last-click approach to marketing attribution, retargeting will naturally outperform other tactics – receiving 100% credit for conversion. If a more advanced measurement solution is used – one that assigns fractional credit to each and every touchpoint along the path to purchase – it is likely to show the conversion rate of retargeting ads is lower than original suggested.

So, let’s take a look at whether retargeting is receiving more credit than it deserves, and how can marketers establish where the true credit for a conversion really lies…

Path to purchase

The effectiveness of retargeting is largely due to the fact that ads are aimed at consumers who have already expressed interest in a product or service – a relatively small pool of potential customers who have visited a website but are yet to convert.

These consumers will have interacted with the product at various stages throughout the path to conversion and been influenced by numerous other touchpoints prior to retargeting. They may even have made the decision to buy before seeing the retargeted ad.

Consider a consumer who has clicked on a display ad showing a special offer for a new smartphone, viewed the product on the brand’s website, and subsequently decided to buy after seeking friends’ opinions and reading reviews on social media. If this consumer was then exposed to a retargeted ad prior to purchase, this would have minimal impact on their decision to buy, yet would still receive full conversion credit with a last-click marketing attribution model.

The holistic view

To make effective use of retargeting, marketers must have the ability to measure the incremental performance of these ads in driving conversions, versus the volume of conversions that would have taken place anyway.

Without this capability, marketing budgets will be wasted on retargeting consumers who have already made the decision to purchase.

To specifically quantify the impact of retargeting tactics, advanced measurement solutions must determine the point of diminishing returns on repeated impressions.

This is done by executing billions of comparisons between both converters and non-converters, and calculating the contribution that channels, campaigns, and touchpoints in all stages of the sales funnel.

In addition to understanding the point at which repeated impressions fail to drive incremental conversions, an advanced multi-dimensional measurement solution should also establish the point of diminishing returns on ad frequency. This enables marketers to set frequency caps to avoid over-saturating the user, or bombarding them with advertising that is no longer effective.

Without these advanced capabilities, a marketing attribution solution will struggle to measure the true performance of retargeting ads.

Where we stand

Retargeting tactics do have a certain value in keeping brands and products top-of-mind, but their performance is considerably exaggerated by flawed last-click measurement methodologies.

To gain a true reflection of retargeted ad value, marketers need to take a holistic approach to measurement, implementing a multi-dimensional marketing attribution solution that assigns credit to each touchpoint and attribute along the journey to conversion, establishing the point of diminishing returns for repeated impressions and ad frequency.

This understanding empowers marketers to make informed decisions and effectively allocate budgets to boost campaign effectiveness. Advanced marketing attribution is the missing link between retargeting statistics and an ad’s real impact on conversion.

Ben Sidebottom

Ben Sidebottom is the director of product management, research and development for Visual IQ in the EMEA region, based in the company's London office.

Before joining Visual IQ, Ben served as head of media systems at Moneysupermarket.com, where he was responsible for the design, implementation, and use of the brand’s online marketing technology stack. During his time with the company, he created one of Europe's first client-side brand trading desks, which offered first and third-party audience overlays on third-party inventory, all optimised using an algorithmic, automated attribution model. With more than eight years of experience in the digital sector, Ben has also held positions at Essence Digital, one of the UK’s leading media agencies, and comScore, where he led the technical consultancy for its largest Digital Analytix Enterprise clients, including BBC and ITV.